When shopping for home insurance, there's much more to consider than how much your coverage will cost. Your agent or insurance company will determine how much it would cost to replace your home and many of the items inside. Most standard policies will provide coverage for damage to your home (and many belongings) caused by theft, fire and lightning, smoke, frozen pipes, ice and snow.
The price you pay for insurance can vary by hundreds of dollars, depending on the insurance company you buy your policy from. Here are some things to consider when buying homeowners insurance.
Ask your friends, check the phone book or contact your state insurance department. Also check consumer guides, insurance agents, companies and online insurance quote services. This will give you an idea of price ranges and tell you which companies have the lowest prices. But don't consider price alone. The insurer you select should offer a fair price and deliver the quality service you would expect if you needed assistance in filing a claim. When you've narrowed the field to three insurers, get price quotes.
Raise Your Deductible
Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums.
Don't confuse what you paid for your house with rebuilding costs
The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you should.
Buy your home and auto policies from the same insurer
Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverages from different companies.
Make your home more disaster resistant
Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters. In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.
Improve your home security
You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations.
Seek out other discounts
Companies offer several types of discounts, but they don't all offer the same discount or the same amount of discount in all states. For example, since retired people stay at home more than working people they are less likely to be burglarized and may spot fires sooner, too. If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies. Some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere.
Maintain a good credit record
Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price homeowners insurance policies. To protect your credit standing, pay your bills on time, don't obtain more credit than you need and keep your credit balances as low as possible.
Stay with the same insurer
If you've kept your coverage with a company for several years, you may receive a special discount for being a long-term policyholder. But make certain to periodically compare this price with that of other policies.
Review the limits in your policy and the value of your possessions at least once a year
You want your policy to cover any major purchases or additions to your home. But you don't want to spend money for coverage you don't need.
Look for private insurance if you are in a government plan
If you live in a high-risk area - say, one that is especially vulnerable to coastal storms, fires or crime - and have been buying your homeowners insurance through a government plan, you should check with an insurance agent or contact your state department of insurance for the names of companies that might be interested in your business.
When you're buying a home, consider the cost of homeowners insurance
You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. It may also be cheaper if your home's electrical, heating and plumbing systems are less than 10 years old. Remember that flood insurance and earthquake damage are not covered by a standard homeowners policy. Most homeowners policies will cover business equipment in the home, but only up to $2,500 and they offer no business liability insurance.
Although you want to lower your homeowners insurance cost, you also want to make certain you have all the coverage you need.